Sony Bullish on Sensors After Quake Causes Quarterly Profit to Halve

By ReutersNovember 01,2016

A reception staff walks under a logo of Sony Corp at its headquarters in Tokyo February 4, 2015. REUTERS/Yuya Shino/Files

TOKYO (Reuters) - Japan's Sony on Tuesday said it remained bullish about the long-term prospects of its cash-cow imaging sensor business after earthquake damage to a major factory contributed to a 48% drop in quarterly profit.

Sony's imaging sensors for cameras and smartphones helped the electronics manufacturer emerge from years of restructuring during which it pulled out of low-margin consumer goods to concentrate on entertainment, videogames and sensors.

But progress stalled when a series of earthquakes in April caused stoppages in sensor production, leaving the broader semiconductor division swinging to a second-quarter loss. Sony said it took almost half a year for shipments to fully recover.

"Demand for (camera) sensors from smartphone manufacturers, including Chinese players, has been strong," said Chief Financial Officer Kenichiro Yoshida at an earnings briefing. "We are also receiving many inquiries for the next year."

Yoshida also said Sony was taking steps toward entering the automotive market as it seeks to reduce reliance on the volatile smartphone sector. One such step was automotive parts supplier Denso Corp deciding to adopt Sony sensors.

"It will take three to five years before shipments of automotive sensors begin in earnest," he said. "But we are confident that we will be able to build a solid position in the market."

In videogames, Sony said profit fell 20.5% as income earned abroad was dulled by a strengthening yen.

But investors are betting on momentum in the gaming business to pick up toward the year-end holiday shopping season with the launch this month of the PlayStation 4 Pro, an upgrade to its flagship console capable of rendering high-definition graphics.

Sony is also widely expected to build an early lead in the fledgling virtual-reality (VR) market, with a headset priced more modestly than those of rivals and compatible with the 40 million PlayStation 4 consoles it has sold to date.

Sony's earnings report came a day after the manufacturer lowered its full-year profit forecast by 10% to 270 billion yen due mainly to an impairment charge brought about by the sale of its battery business.

A 0.7% decline in Sony's share price on Tuesday indicated investors were unfazed by the revision, as Sony had already flagged the impairment charge and maintained its sales outlook of 7.4 trillion yen.